Archive for January, 2007

Thus today’s situation is fascinating in several regards. The incidence of hit batsmen in major league baseball has dramatically increased in the past couple of decades; a significant transformation has taken place in the very nature of the game. Yet this transformation has caught little notice, engaging neither broad contemplation nor comprehensive understanding.

Regular readers of Sabernomics know that I am fascinated by the topic. I will just list one link to a recent post on the subject. It would probably be easier to Google search for hit batters on this blog.

Most interesting is his discussion of the value of managers. Basically, Lewis says managers hardly matter. The funny thing is, I was just noticing how low MLB manager salaries are relative to football coaches in college and the pros.

For the past two years, I’ve turned Sabernomics over to Doug Drinen for the weeks leading up to the Super Bowl. I won’t be doing so this year, because Doug has become a full-time blogger at the Pro-Football-Reference Blog. So, go on ever and check out what he has to say.

My first thought when I saw that Pat Gillick had locked up Chase Utley for the next seven years for $85 million was that it is a good deal. Sure enough, when I popped his performance into my long-run salary projector tool, he projects to be worth about $115 million, $30 million more than he will get over the life of the contract. Even after I acknowledge that the Phillies could be paying him a little less during his arbitration years, it is still a good deal. But then I had a thought. What about Marcus Giles?

Baseball-Reference has Giles as the third most similar player to Utley through age 27. And based on Giles’s 2006 performance, he’d be worth only $55 million over seven years. Yikes! That would make this a very bad deal. But one player comparison doesn’t render the deal a bad one. He also compares well to many players with very good careers.

As any economist will tell you, there is no such thing as a costless choice. The Utley deal is the type of risk that teams should make. Individuals tend to be risk averse, while firms are risk neutral. If a player suffers diminished capacity in his ability to play baseball, this will result it big financial loss that is difficult to guard against. While teams invest in many other assets that include many players and other business interests. Some will go bad, while others will succeed. Because of its diversified portfolio of assets, the damage that any one project is likely to be balanced by success in another. Players, however, will want to guard against their loss of ability, and ought to be willing to accept less than the expected value of their future performance. This represents a profit opportunity for teams.

In several years, this deal may not look so good: Utley may get injured or the economics of the game may change. But the potential for failure shouldn’t deter GMs from making similar moves. The future is not 100% predictable, so it’s unfair for blaming a GM for signing a deal like this if it goes bad.

Addendum: Some of you are curious about where “my long-run salary projector tool” comes from, and with good reason. I briefly introduced it in a post on Barry Zito’s worth, but I didn’t go into great detail. Basically, I take a recent marginal revenue product estimate of player performance (explained in detail in The Baseball Economist), assume a 10% annual rise in revenues and salaries (consistent with the historical rise in salaries), and make a minor adjustment for aging. It’s a rough model, but useful.

Yesterday, the Braves signed Craig Wilson to a one-year, $2 million deal. This move is so good, I don’t even know how John Schuerholz pulled it off without some other team swooping in with a better offer.

Wilson is coming off the worst season of his career in which he was still pretty close to league average, and some of his decline may have been a side-effect of his mid-season trade to the Yankees. His career line of .265/.354/.480/.834, along with his ability to play the outfield or first, ought to have brought many suitors. I estimate that the dollar value of his play in 2006 was $3.6 million.

Schuerholz has indicated that Wilson will split time in the outfield, at first, and hitting off the bench. With Langerhans and Diaz in left, Andruw in center, and Francoeur in right, there doesn’t seem to be much room in the outfield. With the lefty Thorman manning first, it would make a good platoon; though, I’d prefer Wilson to play there full time. As long as he gets off to a good start, I think he’ll win the job outright. I just don’t see any alternate talent that could keep his bat on the bench.

How did the Braves pull this off? I suspect that Wilson really wants to play for Bobby Cox and the Braves. But, I really don’t care how it happened. I’m just glad it did happen.

Adam caught a lot of flack as a player in Atlanta before finally winning over Braves fans last year. My position on Adam has been strange: I like him yet I have wanted him traded. My view of Adam is the same as it was before his breakout.

– He is NOT a good defensive player. Those touting him for future gold gloves are either deluded or flat lying. Yeah, he’s not Giambi, but, he’s not good by any defensive metric out there. And my own perceptions of his play confirm what the stats show.

– He is slow, very slow. Because he is a lefty, he will never be able to play any position other than first.

– He doesn’t have the team-leader “intangibles.” By all accounts he is quiet, and his nickname “three-second delay” indicates he’s not the guy teammates rally around.

– He is NOT the type of first baseman you build around. The Braves should have moved Chipper to first and held on to Andy Marte.

Given all of this, Adam LaRoche is a quality MLB ballplayer who will have a decent career. And it’s possible that he will gain some more power that might make him even more valuable. I suspect he will play for a lot of teams in a first base platoon and pinch hit.

So, when he was traded to Pittsburgh yesterday for reliever Mike Gonzalez and shortstop prospect Brent Lillibridge, I was torn as to what to think. Gonzalez is the type of pitcher I like: he has a 2/1 strikeout-to-walk ratio and is stingy with the longball. The problem is that while he’s been good for the the Pirates, he’s only covered about 3.5% of the team’s innings pitched. While LaRoche hasn’t been quite as good a hitter as Gonzalez is a pitcher, like most everyday position players, he’s good for about 10% of his team’s plate appearances. I’m worried that the runs the Braves are saving are going to be swamped in the fewer runs produced.

In 2006, I estimate the Gonzalez’s play generated $5.12 million, which is $4.67 less than LaRoche’s $9.79 million. Granted that 2006 was a career year for Adam—and steady sailing for Gonzalez—but I think LaRoche’s break-out is for real. PrOPS has him right at what he actually produced, which is a good sign.

Salary-wise, LaRoche and Gonzalez are similar. Gonzalez agreed to a one-year $2.35 deal to avoid arbitration for the coming season. LaRoche is still waiting for his hearing, but he will be getting somewhere between $2.8 and $3.7 million, probably on the low side of that range. All of this talk you’re hearing about the Braves clearing salary space is overstated.

So, straight up, I don’t like this deal, even if LaRoche falls back to an .850 OPS player. However, this isn’t a straight-up deal. Brent Lillibridge, the prospect coming to Atlanta, is intriguing. He’s a college product who has put up good numbers in the minors, and he plays a difficult defensive position. His minor league performance is a bit difficult to judge since he’s never been past high-A ball even though he’s 22. He certainly makes the deal better for the Braves, but I don’t know if it’s enough.

This deal has the potential to have one big side benefit. The word is that Scott Thorman is going to replace LaRoche at first. I don’t have a problem with Thorman, but I would prefer to see Chipper move to first and allow Willy Aybar to become the everyday third baseman. Chipper will have to field fewer balls, and I think the position will keep him healthier. A healthier Chipper would be a big boost to the offense. Chipper is also probably a defensive upgrade over LaRoche. Aybar is probably a defensive upgrade, and he’s certainly an offensive upgrade over Thorman. The Braves should take this opportunity to make the switch before the season starts. If this happens, then I think it’s definitely a good deal.

Jim Caple of Page 2 has a very nice piece on Sean Forman and all that he is doing with Baseball-Reference.

As it is, the most challenging part of Baseball-Reference.com is convincing your spouse that you aren’t surfing for porn — that you really can spend that many hours staring at the computer screen without a single salacious image.

How does Sean do it?

[It’s] dedication, brains and midnight oil that allows us to know that Sandy Koufax held the Mets to one run over eight innings to win his 19th game in 1963 despite pitching on just one day of rest. And that Paul Molitor hit .291 in his 20s and .308 in his 30s. And that Barry Bonds has led off a game with a home run almost as many times (nine) as he’s ended one with a home run (10). And that Pete Rose had more hits against Phil Niekro (64) than any other pitcher. And that …

Sorry. I can’t help myself once I get started.

The hard work also helped Forman reach the true standard of success in life. His hobby is now his career. After all those lonely hours and long years of research, the site has become lucrative enough through subscription and page sponsorships — he says the page averages 40,000-50,000 hits per day — that Forman recently left his teaching position at St. Joseph’s University in Philadelphia to make Baseball-Reference.com his full-time occupation.

So now he’ll have even more time to make the site better. Though I don’t know how it possibly could be.

According to the AJC, Adam LaRoche has requested $3.7 million to play in 2007, while the Braves are offering $2.8 million. Should the sides not agree on a salary, the parties will have one of these offers selected by a panel of arbitrators following a hearing in February. Final offer arbitration requires that the panel choose one of these two offers.

LaRoche is entering arbitration at a good time. He just had a very good year during an offseason when salaries are rising. However, I think LaRoche has selected a number that gives him very little bargaining power. I think he should settle as soon as possible, and the Braves have little reason to do anything but wait until February.

I estimate that LaRoche generated $9.79 million in revenue last year Assuming that Adam’s 2007 is identical to his 2006 campaign, and that salaries escalate by 10%—as they have for the past 20 years—LaRoche will generate approximately $10.77 million. This is well above what Adam is even asking, but arbitration-eligible players usually earn far less than their worth on the free agent market.

Recent history indicates that arbitration-eligible hitters typically earn about 77% less than their gross marginal revenue products. For LaRoche this means a projected salary of about $2.5 million, and this number is based on some pretty rosy assumptions. Don’t think that the Braves don’t know this.

If I were Adam, I’d stay close to the phone and take the first compromise the Braves offer. The Braves have a strong case, and I see very little that could sway a panel to award him $3.7 million.

Addendum: I figured I should look at the Braves other arbitration candidate, Oscar Villarreal, as well. Villarreal ought to be worth about $5.08 million in 2007 according to my estimates. Arbitration-eligible pitchers tend to get 78% less than their gross MRPs. This puts his projected salary at $1.12 million. He is asking for $1.3 million, the Braves are offering $860,000. Those are more reasonable offers for arbitrators to deliberate over, but I give a slight advantage to Oscar. However, his nickname “The Vulture” can’t help.

The problem is that the best way to keep a GM job when you know you’re in danger of losing it is to produce results in the short term, sometimes in the very short term. This idea of trading a dollar in the future for 10 cents in the present often manifests itself in moves like trading prospects or young players for “proven” veterans, signing well-known free agents whose name value exceeds their on-field value, and backloading deals to maximize disposable payroll in the current year without regard to the payroll consequences for future years.

Keith kindly asked me to comment on some potential ways that owners might try to limit this type of behavior.

Solving this problem is not easy, and it’s one that plagues owners of all kinds of businesses. Professor J.C. Bradbury of Kennesaw State University, the author of the upcoming book “The Baseball Economist” and the man behind the Sabernomics blog, points out how difficult it is to overcome the moral hazard issues inherent in the GM role:

“Whether it’s through tying bonuses to stock options or hiring outside auditors, it’s something that owners can only hope to mitigate, not solve. I wouldn’t be surprised if owners began to give bonuses that are good even if you’re fired. If you sign a free agent or draft a certain player who reaches a certain level, you get a share of that, whether you are with the team or not. This would encourage the GM to focus on the long-term.”

Some teams could choose to give their GMs ownership stakes, as Oakland has done with Billy Beane, but doing so also represents a much more firm commitment to the GM than most teams are willing to make.

Because it’s an Insider article I don’t want to quote too much, but Law discusses the specific clauses of several contracts that may be influenced by the win-now-or-be-fired attitude of some GMs.